Aussie airline goes under, strands 4,000 travelers

February 17, 2012 - 2:25 AM
Air Australia Honolulu

Daryl Maudsley, left, and his wife Cathy, center top, pose for a photograph with their children, from second left, Joshua, Daniel and Elise, all from Coolum Beach, Queensland, Australia, as they wait for a taxi at the airport in Honolulu after discovering their Air Australia flight to Brisbane wasn't taking off on Thursday, Feb. 16, 2012. Thousands of travelers from Hawaii to Thailand were stranded after budget airline Air Australia ran out of money and went into voluntary administration, immediately grounding its five-jet fleet. (AP Photo/Audrey McAvoy)

SYDNEY (AP) — Thousands of travelers from Hawaii to Thailand were stranded Friday after budget airline Air Australia ran out of money and went into voluntary administration, immediately grounding its five-jet fleet.

The Brisbane-based international and domestic airline, formerly known as Strategic Airlines, said all flights had been canceled and the airline would not be accepting new bookings because it could no longer pay its bills. Voluntary administration in Australia is similar to bankruptcy protection in the U.S., and can buy a company time to trade out of its financial problems.

"It currently appears that there are no funds available to meet operational expenses so flights will be suspended immediately," the airline said in a statement. Passengers who bought tickets with credit cards or had travel insurance may be given a refund, the airline said.

Around 4,000 passengers were overseas with Air Australia round-trip tickets, voluntary administrator Mark Korda said. Some of those affected were stranded in Honolulu and Phuket, Thailand.

"Overnight, the company was unable to refuel its planes in Phuket," Korda told Australia's Fairfax Radio. "The directors appointed us at 1:30 this morning and the boys have been working throughout the night to deal with what's a very difficult situation."

Stranded in Honolulu, Priya Sinh was forced to postpone her 18th birthday party on Saturday at her home on Australia's Gold Coast. She used her iPad to log onto Facebook to tell her 70 guests not to come because she wouldn't be back in time.

"We tried to laugh about it, but it wasn't funny," she said while her family called hotels looking for a room. Her mother managed to reserve the last four seats on a Jetstar flight to Sydney leaving Saturday.

Australian airline Qantas and Jetstar, its budget subsidiary, were considering adding services to help stranded passengers get to their destinations, Qantas CEO Alan Joyce said. He said the airline will sell stranded passengers tickets for the same price they paid for their Air Australia tickets, giving them a chance to recover the full price from their travel agencies or credit card companies.

Air Australia's fleet consists of five Airbus A330-200 and A320-200 aircraft, and regularly flies to Bali, Phuket, Honolulu and cities within Australia.

Korda said in a statement that Air Australia's administrators were calling for immediate expressions of interest in the sale of the business.

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Associated Press writer Audrey McAvoy in Honolulu contributed to this report.